The BLT: The Blog of Legal Times

The Morning Wrap

Flying Low: The parent company of American Airlines Inc. is filing for Chapter 11 bankruptcy, Bloomberg reports. The move comes after the company was unable to get cost-cutting labor deals.

Bye Bye Barney: Rep. Barney Frank (D-Mass.) will not seek reelection in 2012 after serving 16 terms in the House, The Boston Globe reports. The newspaper says he would have faced a difficult battle to keep his seat.

Cain Allegations: A woman from Atlanta said she had a consensual affair for several years with Republican presidential candidate Herman Cain, The Washington Post reports. Cain denied the allegations made by Ginger White.

Rejection: A federal judge in Manhattan on Monday rejected a $285 million agreement Citigroup Inc. reached with the U.S. Securities and Exchange Commission to settle civil fraud charges the agency brought against the company, The Wall Street Journal reports. U.S. District Judge Jed Rakoff said the deal was "neither fair, nor reasonable, nor adequate, nor in the public interest."

Questioning DOJ: Sen. Lisa Murkowski (R-Alaska) is urging the U.S. Justice Department inspector general and Office of Professional Responsibility to investigate why the DOJ decided not to pursue a teen sex case against a key government witness in the failed public corruption case against former Sen. Ted Stevens and prevented her state from prosecuting him, the Anchorage Daily News reports. The DOJ declined to comment on the matter concerning former Veco Corp. Chairman Bill Allen.

Coming to America: A former Crowell & Moring counsel who fled to Asia after he was accused of stealing millions of dollars from client escrow funds will return to New York to face charges stemming from the misappropriation of funds, the New York Law Journal reports. The lawyer, Douglas Arnsten, was arrested in Hong Kong.

Federal Prosecutors Want $225K From IMAX Dinosaur Film Producer

Federal prosecutors in Washington are not giving up trying to get back the $225,000 that the government contends it mistakenly paid to the producers of an IMAX film about dinosaurs that is playing at the Smithsonian Institution.

The U.S. Attorney’s Office for the District of Columbia in April sued Comet Distribution Ltd. to recoup the alleged overpayment. But the case hit a snag. For months, according to prosecutors, the government was unable to serve the necessary court papers to let the case move forward.

The hitch now appears resolved. U.S. District Judge Beryl Howell this month was preparing to dismiss the case for the prosecutors’ failure to find Comet’s agent to serve the suit.

An assistant U.S. attorney, Judith Kidwell, said the government has now delivered the suit to Comet’s agent, Valerie Thibault, in Dade City, Fla. Kidwell said in court papers (PDF) this month that the government had trouble finding Thibault because she had moved.

A spokesman for the U.S. Attorney’s Office, William Miller, on Monday confirmed Comet has been served a copy of the suit. Miller, however, declined further comment about the status of the civil case.

Thibault was not reached for comment Monday afternoon. Carl Samson, a producer of “Dinosaurs 3D: Giants of Patagonia,” the 40-minute film that is playing at the National Museum of Natural History, did not immediately respond to an e-mail seeking comment.

In June, Samson sent Kidwell an e-mail asking for a “proposal agreement,” court records show. Samson responded to a message from Kidwell that inquired about Thibault’s whereabouts. Neither side in the dispute has filed court papers suggesting the dispute has settled. There is no attorney of record identified for Comet.

The suit against Comet alleges unjust enrichment stemming from the government’s mistaken extra payment for the licensing and exhibition of the dinosaurs film. The government claims it sent in mistake an extra $300,000 to Comet. Comet, according to the suit, returned $75,000.

The Smithsonian and Comet entered into a 50-year contract for the dinosaurs film. The Smithsonian, according to the contract, agreed to pay a one-time fee of $600,000.

The contract allowed two installments—one before March 1, 2008 and the other before October 1, 2008. Prosecutors contend the government paid an extra $300,000 in October 2008.

Arent Fox Lobbying for Homemade Cigarette Machine Maker

Updated at 5:17 p.m.

Former Rep. Philip English (R-Pa.) of Arent Fox is advocating for a Cincinnati-based company that manufactures machines that let consumers roll their own cigarettes, according to lobbying registration paperwork submitted to Congress last week.

English, a senior government relations adviser with the firm, is lobbying for RYO Machine LLC on licensure and taxation issues concerning the devices, which are intended to making smoking cheaper.

The machines allow customers to make their cigarettes with pipe tobacco, which receives a lower tax rate than tobacco for cigarettes. The federal excise tax is $2.83 on a pound of pipe tobacco, compared with $24.78 on a pound of roll-your-own tobacco and $20.13 on 400 pre-manufactured cigarettes that have about a pound of tobacco. More than a thousand of the machines are in tobacco shops in dozens of states, according to the company's Web site.

English said RYO Machine hired his firm to make Washington policymakers aware of "unfair attention" it has received from the U.S. Treasury Department.

The U.S. Treasury Department Alcohol and Tobacco Tax and Trade Bureau last year issued a rule that would regulate cigarettes that consumers produce in stores for personal use. The ruling, which RYO Machine is fighting in federal court, would subject cigarettes made in the shops to the same taxes as cigarettes produced by large manufacturers.

"I'm excited about helping them in a small way," English said.

Settlement Reached in $20M Wrongful Death Case Against GSA Contractors

Just before the Thanksgiving holiday, a Washington federal judge signed off on a settlement in a $20 million wrongful death case stemming from a 2004 steam explosion in downtown D.C. that killed two men.

It's a case that has pitted seven defendants - the U.S. government, the District of Columbia Water and Sewer Authority and five federal government contractors and subcontractors - against one another for more than six years over liability.

The terms of the settlement with the private companies are confidential. The settlement agreements with the government parties are not confidential, but they were not immediately available.

Joseph Hudert was killed on April 23, 2004, while working on water and steam systems connecting to the New Executive Office Building. Hudert's employer, Jessup, Md.-based Cherry Hill Construction Inc., was a subcontractor for Grunley-Walsh Joint Venture LLC, a Maryland construction company that contracted with the U.S. General Services Administration to do the project.

Hudert’s family filed a wrongful death lawsuit in March 2005 in U.S. District Court for the District of Columbia. The family of the other man killed in the explosion, Francis Stotmeister, filed a lawsuit in the same court one month later seeking $30 million in damages from the same set of defendants.

In addition to Cherry Hill Construction, Grunley-Walsh, the U.S. government and DC Water, the other defendants include McLean, Va.-based Alion Science and Technology Corp.; Philadelphia-based Day & Zimmerman Services; and Gaithersburg, Md.-based M&M Welding & Fabricators Inc.

From the beginning, the defendants have pursued counter-claims and third-party complaints against one another over who should be liable under indemnification and contribution provisions in the contracts surrounding the project. The defendants denied any wrongdoing, blaming each other for any mistakes or mismanagement that the two families allege led to the explosion.

An eighth defendant, Consolidated Engineering Services Inc., was already dismissed from the case and is not part of the settlement agreement with the Hudert family.

In addition to the intra-defendant motions, motions for summary judgment were also being briefed before U.S. District Senior Judge Thomas Hogan, who took over both cases from U.S. District Judge Reggie Walton in October.

Reed Smith Attorney in D.C. Jumps to Nixon Peabody

A former Reed Smith partner has jumped to Nixon Peabody’s Washington, D.C. office, the firm announced Monday.

Areta Kupchyk has joined Nixon Peabody’s life sciences and health services practice as a partner. Previously, Kupchyk was an assistant general counsel for litigation at the Food and Drug Administration, according to a Nixon Peabody press release.

Kupchyk focuses her practice on FDA regulation of drugs, medical devices, biologics and biotechnology products.

“Areta offers our clients the unique and valuable perspective of one who spent considerable time as an FDA insider,” Susan Robfogel, chair of Nixon Peabody's life sciences practice, said in a statement.

On Cyber Monday, Feds Shut Down 150 Web Sites

Federal authorities on Monday announced the seizure of 150 domain names for Web sites that featured alleged knock-offs of authentic jerseys, handbags, sports equipment and other items.

The results of the undercover operation "In Our Sites" top last year's crackdown, when investigators shut down 82 web sites.

In most cases, the person or people operating the commercial sites do not challenge the domain name seizure in court, Lanny Breuer, the assistant attorney general for the Justice Department’s criminal division, told reporters.

“The sale of counterfeit goods cheats consumers and robs legitimate businesses – both large and small – of the fruits of their hard-earned work,” Breuer said in a statement today. “We will not tolerate those who seek to profit by abusing the Internet and stealing intellectual property at the expense of authors, artists and inventors.”

John Morton, who heads the U.S. Immigration and Customs Enforcement agency, told reporters on a conference call: “We want to promote a lawful online environment as much as we can and that means going after the small but significant number of Web sites that are engaged in frauds on consumers.”

Morton and Breuer said law enforcement officers worked with copyright holders in an undercover sting to determine whether any targeted Web site was offering counterfeit goods for sale. Investigators bought sports jerseys, golf equipment, DVDs, shoes, sunglasses and other items.

DOJ officials said in most of the cases the goods were shipped to the United States from a supplier in another country. China was a main source for much of the goods, according to law enforcement officials.

The domain name becomes the property of the federal government if no person challenges the seizure. Since 2010, federal authorities have shut down 350 domain names through “Operation In Our Sites.” Of the 350, 116 sites are now the property of the government.

The authorities post a banner on any site the government has seized. “MyJerseyShop.com,” for instance, is no longer up and running. The banner on the site notifies the visitor of the seizure and provides the penalties for willful copyright infringement.

Click here for a list of the web sites the authorities seized. A sampling form the list: louisvuitton-bags-forcheap.com, mlbjerseyswell.com, texansjerseystore.com and shopsbag.com.

This Week In The National Law Journal

Diversity: A group of law school deans, admissions officers and pre-law counselors say they need to do a better job identifying minority applicants to push racial diversity in the legal profession above the 10% mark. Karen Sloan reports on a conference at St. John's University School of Law that addressed diversity in law school admissions.

Pain and Gain: Jenna Greene reviews U.S. Equal Employment Opportunity Commission decisions in the past decade, revealing an increase in awards for emotional distress. The agency awarded discrimination victims an average of $106,000 for emotional pain and suffering in fiscal year 2011. The average five years ago was about $85,000.

Misconduct: The prosecutors who botched the case against Ted Stevens will have to decide in the coming weeks whether to try to block the publication of a report that criticizes the government's legal team for systematic withholding of evidence from the late U.S. Senator's defense attorneys. The special prosecutor assigned to investigate the team, however, did not recommend criminal charges for contempt.

Conflict: U.S. Bankruptcy Judge S. Martin Teel Jr. of the U.S. Bankruptcy Court for the District of Columbia criticized Washington's Butzel Long Tighe Patton for failing to disclose a client conflict and stripped the firm of nearly $72,000 in fees. Matthew Huisman reports the judge slammed a partner, saying it was "inexcusable" he didn't show up for a fee application hearing.

Anonymous: Zoe Tillman reports on a legal fight to unmask an anonymous informant in a dispute between Arlington, Va.-based defense contractor, Solers Inc., and the Software & Information Industry Association. The informant accused Solers of using unlicensed computer software. The company sued the informant for defamation in D.C. Superior Court.

'Lawtalk': Want to know the origin of the phrase "indict a ham sandwich?" U.S. Supreme Court correspondent Tony Mauro reports in Inadmissible on a fun new book about legal lingo called Lawtalk. Other items in the column this week: the U.S. Justice Department's Environ­ment and Natural Resources Division seem to be satisfied with their jobs and lawyers for John Hinckley Jr. head to court this week in Washington for a hearing over expanding his conditional release.

The Morning Wrap

Game On: The National Basketball Association and its players reached a tentative agreement Saturday, allowing the start of a 66-game season on Dec. 25, The New York Times reports. "We've reached a tentative understanding that is subject to a variety of approvals and very complex machinations, but we're optimistic that that will all come to pass, and that the NBA. season will begin on Dec. 25, Christmas Day, with a tripleheader," NBA Commissioner David Stern said.

Black Friday: A woman allegedly sprayed customers with pepper spray at a Los Angeles Wal-Mart's Black Friday sale, the Los Angeles Times reports. Witnesses said she was set on getting an XBox game console, which reports say she purchased. "I'm not putting up with pepper spray for one TV," shopper Danny McManus said. "There wasn't a place in the store where you couldn’t smell the stuff. ... It was a gnarly, burning smell."

Simmering Tensions: The Washington Post examines the sometimes strained relationship between the FBI and the New York Police Department after the Sept. 11 attacks. Federal law enforcement officials said the case brought by the Manhattan district attorney’s office last week against Jose Pimentel, an alleged al-Qaeda supporter who allegedly planned to carry out bomb attacks in the United States, illustrates the concerns some in the FBI have with New York police. The case, which the U.S. Justice Department declined to prosecute, is strong, Deputy Commissioner Paul Browne said.

Guitar Battle: Lawyers for Gibson Guitar will be back in federal court in December to try to secure the return of wood seized by federal agents, who raided the company's facilities on suspicions that it broke an environmental protection law, The Tennessean reports. U.S. District Court Judge William Haynes in Nashville, Tenn., decided last month to delay consideration of the case at the request of prosecutors. But he said last week that he will reassess his ruling at the request of Gibson’s lawyers.

Questionable Timing: Retiring Manhattan Supreme Court Justice Saralee Evans called for a sanctions hearing against lawyer Jeffrey Cohen in a divorce case, saying he engaged in a "deliberate pattern of delay" in an effort to keep the judge from completing the case, the New York Law Journal reports. Cohen said he is "completely confounded" by the judge's remarks.

President Obama Nominates Three Attorneys for Federal Posts

Three attorneys were nominated by President Barack Obama to serve in various administrative posts, the White House announced Wednesday.

Mark Alderman, a partner at Cozen O’Connor and chairman of Cozen O’Connor Public Strategies, the firm’s lobbying arm, was nominated as a member for the National Air and Space Museum advisory board. Alderman, who works out of the firm’s Philadelphia and Washington, D.C. offices, is in the business law department of the government relations group.

Keith Harper, a Washington-based partner and chair of Kilpatrick Townsend & Stockton’s Native American practice group, was nominated to become a member of the President’s Commission on White House Fellowships. Harper, who is a member of the Cherokee Nation of Oklahoma, focuses his practice on litigation, green economy and Native American affairs.

Fletcher Wiley, of counsel at Bingham McCutchen, was nominated to serve as a member of the Board of Visitors to the United States Air Force Academy. Wiley, who is based in the firm’s Boston office, focuses his practice on corporate and commercial law, small business development, public and private finance, entertainment law and real estate.

“It gives me great confidence that such dedicated and capable individuals have agreed to join this administration to serve the American people,” Obama said in a statement.

Photo by National Law Journal's Diego M. Radzinschi

D.C. Judge to Consolidate Antitrust Class Actions Over ATM Fees

Four separate antitrust class actions filed against Visa Inc. and MasterCard Inc. in October over an alleged price-fixing scheme are likely to move forward as one case.

U.S. District Judge Amy Jackson issued a minute order yesterday informing all parties that she intended to consolidate the cases because they involved nearly identical allegations of antitrust violations under the federal Sherman Act. She gave attorneys until Dec. 2 to file any objection.

A group of independent ATM operators first filed a lawsuit against Visa and MasterCard in U.S. District Court for the District of Columbia on Oct. 12, led by the National ATM Council, a Florida-based trade association. Three other lawsuits were filed in the same court over the next two weeks on behalf of ATM users.

Although the cases involve similar allegations, they don’t all list the same named defendants, besides Visa and MasterCard. One of the lawsuits, filed on behalf of ATM user Justin Genese (PDF), also names several banks and their affiliated entities as defendants as well, including Bank of America N.A., JPMorgan Chase & Co. and Wells Fargo Bank N.A.

In all of the lawsuits, Visa and MasterCard are accused of conspiring with banks to restrict ATM operators from setting their own fees, making it impossible for operators to charge more competitive rates for different types of ATM transactions.

None of the defendants have filed a response to the complaints in any of the cases.